NMSU leadership: Forgiving athletics debt unlikely

Garrey Carruthers,left, chancellor and president of New Mexico State University and Debra Hicks, right, chairwoman of the NMSU board of regents, believe it's unlikely the university will forgive the athletic department's debt to the university in response to UNM officials suggesting the same approach last week.(Photo: Josh Bachman/Sun-News)Buy Photo

LAS CRUCES — Debra Hicks, chair of the New Mexico State University Board of Regents, is aware of statements made by her counterpart up north.

In an Albuquerque Journal report, University of New Mexico Regents President Rob Doughty suggested last week that UNM should consider forgiving the athletic department's $4.7 million debt to the university in an effort to "allow the department to move forward unencumbered if it demonstrates it has successfully aligned spending with revenue."

The NMSU Athletics Department has it's own $4,101,810 debt to the main campus.

Hicks said the NMSU Board is watching with keen interest as to how UNM proceeds.

"If they were to (forgive the debt), we have essentially a case study to do it ourselves," Hicks said.

NMSU's Fiscal Year 2018 athletics budget is $18 million while UNM's budget is $33 million.

The NMSU athletics deficit was first addressed in 2009, as the Aggies made the transition to the Western Athletic Conference in 2005 and the department was given the blessing from university administration to "invest" in the program to compete with coaching salaries, recruiting budgets and athletic budgets.

The school built WAC championship quality programs in nearly all sports. But the cost for that success resulted in a $9,496,617 deficit for Fiscal Year 2010.

"They went way beyond what they should have and took the university into a deficit and that created a bunch of reporting responsibility on us," Hicks said. "We had to agree to a number of things that basically was oversight from Higher Education Department. We should have had these things in place at first, but it created an oversight for our athletic department to a rigor that had not been in place."

The initial agreement with the Higher Education Department called for the athletics debt to be paid by Fiscal Year 2018. It was extended to 2021 when Athletics Director Mario Moccia came on board in 2014.

Hicks said that the university is exploring extending the debt payment schedule, which would allow Moccia some flexibility to address recruiting budgets for all sports, coaching staff shortfalls for football and potentially enhancing the contract of men's basketball coach Chris Jans. The men's basketball program has lost two coaches to higher paying jobs in the past two years.

An athletics subcommittee is working on a proposal to present to the board as soon as March, Hicks said.

"We have had conversations with (New Mexico Higher Education Secretary Barbara Damron) and it's an internal loan and how we handle that is up to us," Hicks said. "To be very clear, it's a regent's decision, not a university decision. I guarantee you (Damron) is not looking for a forgiveness of a loan, but a deferment is not out of the question at all."

Debt forgiveness?

Although NMSU's debt is a "paper entry" in the university ledger, forgiving the entire athletics department debt may not even be an option at NMSU.

NMSU Chancellor Garrey Carruthers described writing off NMSU's remaining debt as a "non-starter," citing a 2009 agreement with the Higher Education Department (then led by Secretary Peter White) and signed by then Regents Vice Chair Javier Gonzales after it was reviewed by interim President Waded Cruzado.

"They (the Higher Education Department) approve the overall budget of the university so they can watch transactions and there are certain transactions they don't like and those are units running deep in the hole and then siphoning money off from over here to put over there," Carruthers said. "We agreed to pay it off."

Gonzales and the board proposed the following guidelines that remain in place today:

Revenue budgets were to be conservative and attainable

Athletics was not authorized to spend more than it would take in in a given year

Expense budgets were to be closely overseen by central administration.

Central staff was to lead in the development and implementation of a revised budget for FY 2010 to meet these criteria.

The university would not "bail out" athletics.

Carruthers meets with Moccia and his staff each month to review the athletics department budget and report to the Higher Education Department.

"The money is owed to the university because the expenditures have been made," Carruthers said. "It's kind of like a bank. They kind of took a loan out on us and they need to pay their loan back."

NMSU athletics has been balancing its budget, plus making a "loan" payment to the university for years.

The athletics department is scheduled to pay $823,036 this year, $903,246 next year, $1.8 million in Fiscal Year 2020 and the remaining $564,654 in FY 2021.

That's about $1 million a year the NMSU athletics department has to pay the university instead of that money being used to attract and keep coaches or improve facilities.

Meanwhile, UNM athletics has been racking up debt and hasn't balanced its budget in eight out of the past 10 years, according to the Journal report.

"(The UNM athletic department) has been under scrutiny for a long period of time," Carruthers said. "What I think you will find out when the sun goes down on the University of New Mexico, they will be managing their affairs much like we manage ours."

In November, the UNM regents approved an infusion of $1.3 million from university reserves to their athletics department to erase another projected shortfall.

Hicks said a similar transfer from NMSU's reserves could damage the school's bond rating.

"I can't speak for other regents, but when you start getting into reserves, just like the state of New Mexico, that affects our bonding rate," Hicks said. "Is that something that we would consider? It would be a topic, but I couldn't tell you if other regents would have a desire to utilize that money in this case."